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ITC eyes buyouts in foods thrust
Business Standard - 05 Dec 2005

Ruchi Ahuja / New Delhi December 05, 2005

It is also planning new product segments to emerge as market leader in five years.

Hotels-to-foods major ITC is looking at acquisitions and new product segments to emerge as a dominant foods player in five years.

“We want to become the number one in the foods business in five years and will do all we can to achieve this target. Today, the company is present in segments such as staples, biscuits, ready-to-eat and heat-n-eat. We now plan to get into all kinds of snacks,” chairman Yogi Deveshwar said.

He, however, refused to divulge further details.

He said, “We are also open to acquisitions, if and when we find something suitable. Our divisional chief executives are always looking out for good opportunities.”

The company intends to leverage its three assets, as Deveshwar puts it, to achieve this. Firstly, the company has strong linkage with farmers (via e-choupals) where it can source high-quality raw materials with exact traceability.

ITC has 5,400 e-choupals covering 34,000 villages and by the end of the current fiscal it may touch 6,000. The company targets to set up 25,000 e-choupals covering 1 lakh villages by 2010.

The company currently trades in 13 commodities including wheat, maize, chana, sorghum, bajra, mustard, soybean, coffee. The company also runs aquaculture projects in Uttar Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, Karnataka and Andhra Pradesh.

Secondly, the company plans to focus on its restaurant business (as part of hotels business) for growth. Lastly, it is banking on its strength in brand building, trade, marketing and distribution. ITC has seen over 100 per cent growth in the packaged foods segment. “We just plan to continue with it for a couple of years to begin with,” he added.

Deveshwar feels the organised packaged foods sector in the country is expensive compared with the rest of the world owing to higher taxation. “We have recommended a no tax regime for processed foods as it is a major hindrance to good volumes in this business. People avoid picking up on-shelf stuff owing to high prices and volumes can come only if prices are lower. Government can bring taxes to nil and then help us lower prices. Of course, the government can make up the tax loss via income tax.”